Correlation Between Oracle and Calvert Emerging

Can any of the company-specific risk be diversified away by investing in both Oracle and Calvert Emerging at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Oracle and Calvert Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oracle and Calvert Emerging Markets, you can compare the effects of market volatilities on Oracle and Calvert Emerging and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Oracle with a short position of Calvert Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oracle and Calvert Emerging.

Diversification Opportunities for Oracle and Calvert Emerging

0.3

Correlation Coefficient

Oracle  Calvert Emerging

Weak diversification

The 3 months correlation between Oracle and Calvert is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Oracle and Calvert Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Emerging Markets and Oracle is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Oracle are associated (or correlated) with Calvert Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Emerging Markets has no effect on the direction of Oracle i.e., Oracle and Calvert Emerging go up and down completely randomly.

Pair Corralation between Oracle and Calvert Emerging

Given the investment horizon of 90 days Oracle is expected to generate 2.22 times more return on investment than Calvert Emerging. However, Oracle is 2.22 times more volatile than Calvert Emerging Markets. It trades about 0.23 of its potential returns per unit of risk. Calvert Emerging Markets is currently generating about -0.2 per unit of risk. If you would invest  16,959  in Oracle on September 3, 2024 and sell it today you would earn a total of  1,525  from holding Oracle or generate 8.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Oracle  vs.  Calvert Emerging Markets

Oracle

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Oracle disclosed solid returns over the last few months and may actually be approaching a breakup point.

Calvert Emerging Markets

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Emerging Markets are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Calvert Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oracle and Calvert Emerging

The main advantage of trading using opposite Oracle and Calvert Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oracle position performs unexpectedly, Calvert Emerging can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Calvert Emerging will offset losses from the drop in Calvert Emerging's long position.

The idea behind Oracle and Calvert Emerging Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.